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ACCA Strategic Professional · Advanced Audit and Assurance (International) · Money laundering

Auditors of Norvik Ltd identify transactions suggesting laundering of criminal proceeds. The firm has made a report to the national authority. Which statement best describes the interaction with the auditor's duty of confidentiality under the IESBA Code?

Disclosure is permitted because the IESBA Code allows confidential information to be disclosed when required by law, such as statutory reporting of suspected money laundering. Client consent is not needed, and the auditor must avoid telling the client, to prevent tipping off.

  1. AConfidentiality prevents the report unless the client consents in writing
  2. BThe report is a breach of confidentiality that must be justified to the client afterwards
  3. CConfidentiality is overridden only if the client's management agrees the report is in the public interest
  4. DDisclosure to the authority is permitted where required by law, so the duty of confidentiality does not prevent the reportCorrect

Explanation

The IESBA Code permits or requires disclosure of confidential information when required by law, for example reporting suspected money laundering to the appropriate authority. Client consent is not required, and the auditor should not discuss the report with the client.

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